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THE MINISTRY OF PLANNING AND INVESTMENT

CIRCULAR No.12-BKH/QLKT OF AUGUST 27, 1997 GUIDING A NUMBER OF ARTICLES IN THE REGULATION ON DOMESTIC INVESTMENT IN THE FORM OF BUILD- OPERATE- TRANSFER (B.O.T.) CONTRACTS (issued together with Decree No.77-CP of June 18, 1997 of the Government)

To facilitate and accelerate the implementation of the Regulation on Domestic Investment in the Form of Build- Operate- Transfer (B.O.T.) Contracts (hereafter referred to for short as Regulation on Domestic B.O.T. Investment), issued together with Decree No.77-CP of June 18, 1997 of the Government, the Minister of Planning and Investment provides the following additional guidances on a number of Articles of the said Regulation:

1. On the objects of application of the Regulation on Domestic B.O.T. Investment:

Objects of application of the Regulation on Domestic B.O.T. Investment include:

a/ State enterprises

b/ Enterprises of the socio-political organizations

c/ Cooperatives

d/ Joint-stock companies

e/ Limited liability companies

f/ Private enterprises

g/ Vietnamese citizens who are full 18 years of age or more

h/ Vietnamese residing abroad who are full 18 years of age and more

i/ Foreigners who are full 18 years of age or more and have been staying for a long time in Vietnam.

2. On the State agencies competent to sign B.O.T. contracts

a/ For Group A projects, the State agency competent to sign B.O.T. contracts shall be designated by the Prime Minister on a case-by-case basis. The designated agency may be a branch managing ministry or the People�s Committee of a province or city directly under the Central Government.

b/ For Group B and Group C projects, the State agency competent to sign B.O.T. contracts is the People�s Committee of the province or city directly under the Central Government where the project is to be executed. For this case, the People�s Committee of the province or city directly under the Central Government may authorize the People�s Committee of the district or provincial city or the provincial/municipal branch-managing service to conduct negotiation and sign B.O.T. contracts.

c/ The powers and responsibilities of the State agencies competent to sign B.O.T. contracts shall comply with the provisions of Chapter VIII of the B.O.T. Regulation.

If the implementation of a B.O.T. project involves several branch managing ministries or/and provinces and cities directly under the Central Government, the related branch-managing ministries or/and the People�s Committees of the related provinces and cities shall, within their powers and responsibilities, have to coordinate with and support the State agency competent to sign the B.O.T. contract so that the latter may perform its responsibilities properly and in a timely manner as prescribed.

Criteria and conditions for determining projects of Group A, Group B or Group C as mentioned in this Point and other Points of this Circular shall comply with the provisions of Decree No.42-CP of July 16, 1997 promulgating the Regulation on the Management of Investment and Construction.

3. On the order of drawing up and promulgating lists of B.O.T. projects

a/ Collecting and drawing up lists of B.O.T. projects:

- The Ministry of Planning and Investment shall collect and draw up the list of Group A projects, including:

+ Projects on the construction of the socio-economic infrastructure that have been determined for the implementation of the ratified socio-economic development plannings;

+ Projects proposed by the branch managing ministries or the People�s Committees of the provinces or cities directly under the Central Government;

+ Projects proposed by enterprises of any economic sector.

- The Planning and Investment Service of the province or city directly under the Central Government shall collect and draw up the list of Group B and Group C projects planned for the implementation in the locality, including:

+ Projects already determined for the implementation of the local socio-economic development planning that has been ratified by the competent level;

+ Projects proposed by the provincial/municipal branch-managing services or the district People�s Committees;

+ Projects proposed by enterprises of any economic sector.

b/ Elaborating and approving the pre-feasibility studies or technical reports (referred to commonly as pre-feasibility studies) on the necessity of the projects, stated in the preliminary lists of B.O.T. projects

- Organizations and individuals proposing B.O.T. projects shall have to conduct the pre-feasibility study and report it to the Ministry of Planning and Investment and the branch-managing ministry (regarding Group A projects) or to the provincial/municipal Planning and Investment Service and the provincial/municipal branch-managing service (regarding Group B and Group C projects).

- The competence and procedures for the approval of the pre-feasibility studies shall comply with the Regulation on the Management of Investment and Construction issued together with Decree No.42-CP of July 16, 1996 and the provisions of Article 5 of the Regulation on Domestic B.O.T. Investment.

c/ Promulgating lists of B.O.T. projects

- The Prime Minister shall promulgate the list of Group A projects throughout the country, while the presidents of the People�s Committees of the provinces and cities directly under the Central Government shall promulgate the list of Group B and Group C projects in their respective localities.

- The promulgated lists of B.O.T. projects shall include only those projects with pre-feasibility studies having been already approved by the competent agencies and meet the other conditions prescribed in Article 4 of the B.O.T. Regulation.

- The lists of B.O.T. projects shall be promulgated on the central mass media for Group A projects or on the local media for Group B and Group C projects.

The lists of B.O.T. projects shall be promulgated once every six months. If there is no updated list, the latest lists of the projects shall be promulgated again.

The promulgated lists of B.O.T. projects of Group A must be kept on file at the Ministry of Planning and Investment and the Planning and Investment Services of the provinces and cities directly under the Central Government throughout the country. The promulgated lists of the Group B and Group C projects must be kept on file at the provincial/municipal Planning and Investment Services.

Anyone who is interested in the promulgated lists of B.O.T. projects shall be entitled to receive their copies free of charge.

- Contents of the promulgation of the lists of B.O.T. projects include:

+ The names of the projects

+ The types of the projects

+ The objectives of the projects

+ The location of the projects

+ The preliminary technical norms of the projects

+ The names, addresses, telephone and fax numbers (if any) of the agencies appointed or assigned to act as the State agencies competent to sign B.O.T. contracts. The names, addresses, telephone and fax numbers (if any) of the units or officials in charge of receiving and handling dossiers on the selection of B.O.T. enterprises or founding members of the B.O.T. enterprises and the negotiation on the contents of the B.O.T. contracts.

d/ Funds for the elaboration and promulgation of the lists of B.O.T. investment projects

The funds for the elaboration and promulgation of the lists of B.O.T. investment projects shall be deducted from the State budget. Annually, the Ministry of Planning and Investment and the People�s Committees of the provinces and cities directly under the Central Government shall take initiative in estimating the costs of the pre-feasibility studies and the approval thereof and the promulgation of the lists of B.O.T. projects.

e/ The State agencies competent to sign B.O.T. contracts should take initiative in mobilizing, studying and finding individuals and/or enterprises capable of implementing the B.O.T. projects already promulgated nationwide. The People�s Committees of the provinces and cities in Central Vietnam or in northern mountainous regions may find, mobilize and persuade individuals and/or enterprises based in Hanoi or Ho Chi Minh City to act as B.O.T. enterprises or to establish B.O.T. enterprises in their respective localities.

4. On the selection of B.O.T. enterprises or founding members of B.O.T. enterprises

a/ To inspect the truthfulness of each document in the dossier prescribed in Article 9 of the Regulation on Domestic B.O.T. Investment, the State agencies competent to sign a B.O.T. contract should:

- Use its accounting experts or hire accounting experts from independent auditing companies to examine the enterprises� or contractors� self-introductions of their professional, financial and technical capabilities and experiences; their plans on capital mobilization; their reports on business results and their inventories of assets of the previous year.

- Request, through telephone, fax or telex, banks or other capital providers to re-affirm their commitments in supplying capital for the implementation of the B.O.T. project.

b/ Additional explanation on the criteria mentioned in Article 13 of the Regulation on Domestic B.O.T. Investment.

- To ensure the timely and adequate mobilization of capital means to ensure that the total of the B.O.T. enterprise�s investment capital and the capital to be supplied by the capital providers under their commitment is equal to the amount of capital for the implementation of the B.O.T. project.

- Organization having enough personnel who are technically qualified for the performance of the services and jobs related to the designing and construction of the B.O.T. project is an organization or individual that once well performed the similar services and jobs for at least a project similar to the B.O.T. project to be implemented. To have technicians and managerial personnel with good knowledge and experiences in the management of construction and exploitation of projects means having enough technicians and managerial personnel like any other enterprise that once managed the construction and exploitation of a similar project.

c/ The certificate of being qualified for the implementation of the B.O.T. project shall conform to the form issued together with this Circular.

d/ In cases where two or more enterprises, groups of enterprises or individuals want to implement a B.O.T. project, a bidding shall be organized as prescribed in Article 14 of the Regulation on Domestic B.O.T. Investment.

5. On the preparation and signing of a B.O.T. project and other pre-investment procedures

Right after the selection of a B.O.T. enterprise or founding members of a B.O.T. enterprise, the State agency competent to sign the B.O.T. contract shall together with such enterprise or its founding members perform the following tasks:

a/ Negotiating and reaching agreement on the contents of the B.O.T. contract;

b/ Filling procedures for the establishment and business registration of the B.O.T. enterprise as prescribed by law;

- If the B.O.T. enterprise is an enterprise already established and operating, the additional business registration shall be made. In this case, the B.O.T. enterprise may be a State enterprise, an enterprise of a socio-economic organization, a cooperative, a private enterprise, a limited liability company or a joint-stock company.

- If the to-be-set up B.O.T. enterprise is a cooperative, the procedures for its business registration shall comply with the provisions of the legislation on cooperatives and the relevant provisions of law.

- If the to-be-set up B.O.T. enterprise is a private enterprise, the procedures for its establishment and business registration shall comply with the provisions of the legislation on private enterprises and the relevant provisions of law.

- If the to-be-set up B.O.T. enterprise is a limited liability company or a joint-stock company, the procedures for its establishment and business registration shall comply with the provisions of the legislation on companies and the relevant provisions of law.

c/ Drawing up and approving the technical design of the B.O.T. project;

d/ Filling procedures to apply for permission and investment license;

e/ Filling procedures to apply for land allotment or land lease and allotting or leasing land for the implementation of the project;

The State agency competent to sign the B.O.T. contract should take initiative in guiding and supporting the selected B.O.T. enterprise or its founding members to fulfil the necessary procedures mentioned in Points b, c, d and e of this Article.

When the negotiation and agreement on the B.O.T. contract have been concluded by the B.O.T. enterprise or representatives of the founding members of the B.O.T. enterprise and the State agency competent to sign the B.O.T. contract, the above-said necessary procedures must be fulfilled.

f/ Signing the B.O.T. contract.

6. On the sub-contracts

Simultaneusly with the negotiation on the B.O.T. contract, the B.O.T. enterprise or representatives of its founding members may also conduct negotiation on and prepare for the signing of sub-contracts such as a sub-contract on the sale of products, a sub-contract on the supply of raw materials and fuel, a sub-contract for construction and installation, a sub-contract on management, operation and maintenance of the project and other sub-contracts, if they are deemed necessary.

The State agency competent to sign the B.O.T. contract should oversee the process of negotiating and reaching agreement on the contents of the sub-contracts so that timely adjustments of the contents and clauses of the B.O.T. contract shall be made, if necessary.

7. On organizing the management of a B.O.T. enterprise

a/ For a newly-established B.O.T. enterprise:

- If the newly-established B.O.T. enterprise is a cooperative, the management of such enterprise shall be organized in accordance with the provisions of the Law on Cooperatives and the relevant provisions of law.

- If the newly-established B.O.T. enterprise is a private enterprise, the organizational structure for the management of such enterprise shall comply with the provisions of the Law on Private Enterprises and the relevant provisions of law.

- If the newly-established B.O.T. enterprise is a limited liability company or joint-stock company, the management of such enterprise shall be organized in accordance with the corresponding provisions of the Law on Companies and the relevant provisions of law.

b/ If the B.O.T. enterprise is an existing and operating enterprise:

- The B.O.T enterprise shall have to set up a separate branch to organize the management of the construction, business and exploitation of the B.O.T. project.

- The organizational structure, powers and responsibilities of the branch in organizing the management of the construction, business and exploitation of the B.O.T project shall be decided by the B.O.T. enterprise.

- The branch set up to manage the construction, organizing business and exploitation of the B.O.T. project shall have to apply the independent cost-accounting regime, separating from the cost-accounting regime and accounting reporting applied to the other production and business activities of the B.O.T. enterprise.

8. State management of the B.O.T. project�s service business activities

a/ The State agency competent to sign the B.O.T. contract shall also be the State agency that manages the B.O.T. project�s service business activities.

b/ To fruitfully exercise the State management, and create conditions for the B.O.T. enterprise in the designing, construction and organization of the B.O.T. project�s service business activities, the State agency competent to sign the B.O.T. contract should promptly and efficiently perform the following tasks:

- To make the pre-feasibility study, determine the minimum criteria on quality of the B.O.T. project, on the number and quality of products and services; and make the preliminary evaluation of the project�s impact on the environment and life;

- To provide necessary information for carrying out the pre-feasibility study, at the request of the enterprise or individual that will implement the B.O.T. project;

- To select the B.O.T. enterprise or founding members of the B.O.T. enterprise;

- To evaluate and approve the project�s technical design;

- To coordinate with the B.O.T. enterprise in controlling the project�s construction quality and the construction tempo, ensuring their conformity with the design and plan;

- To conduct the clearance of the land area already planned for the implementation of the B.O.T. project;

- To coordinate with or support the B.O.T. enterprise in fulfilling the pre-investment procedures as well as in the construction, business and operation of the project in accordance with the B.O.T contract;

- To promulgate, together with the B.O.T. enterprise, the regulation on charge collection and payment;

- To supervise the collection of charges on the use of the B.O.T. project, ensuring the achievement of two objectives: First, the B.O.T. enterprise must not abuse its position to collect charges which are too high for the project users; second, to refuse, promptly and reasonably sanction the B.O.T. project users who deliberately do not pay the charges as prescribed;

- To request the B.O.T. enterprise to report on its financial situation and business results, the technical status of the B.O.T. project, the repair and maintenance of the B.O.T. project, at any time it is deemed necessary;

- To meet or request other State agencies to meet the legitimate requirements of the B.O.T. enterprise in the course of construction and business of the B.O.T. project.

9. Supporting the B.O.T. enterprise in case of the lack of public-utility services

a/ If the supply of electricity, water and other public-utility services fails to meet the requirements of production and life of the locality where the B.O.T. project is implemented, the B.O.T. enterprise shall be entitled to enjoy the preferential treament like other enterprises providing such services in the whole process of construction and business of the B.O.T. project. If the B.O.T. enterprise wants to install a separate supply network, the State agency competent to sign the B.O.T. contract and the related service supplying agency shall have to support the B.O.T enterprise to complete such network in time at the B.O.T. enterprise�s request.

b/ In case of the restriction of the users: for example, in the process of construction of the B.O.T. project, automoblies and other motor vehicles serving the B.O.T. project�s construction must go through a road section or street banned for trucks and motor vehicles. In this case, the State agency shall provide guidances for the B.O.T. enterprise to be allowed to use such road section or street for a fixed period of time in the day, when the usage thereof is at the lowest (for example, from 11 p.m. to 5 a.m.) till the project is completed and put into use.

10. On the fund for State agencies competent to sign B.O.T. contracts to perform their functions

The State agencies competent to sign B.O.T. contracts shall be allocated capital by the State budget for the performance of the tasks prescribed in Articles 41 and 42 of the Regulation on Domestic B.O.T. Investment.

The central budget shall allocate capital for State agencies competent to sign B.O.T. contracts of Group A projects.

The budgets of the provinces or cities directly under the Central Government shall allocate capital for the State agencies competent to sign B.O.T. contracts of Group B and Group C projects to be carried in their respective localities.

11. This Circular takes effect 15 days after its signing. In the course of implementation of this Circular, if any difficulty or problem arises, the State agencies at different levels and the related organizations are requested to send their opinions to the Ministry of Planning and Investment for study and proper amendments or supplements.

The Minister of Planning and Investment

TRAN XUAN GIA